“Mr. Beaver, I suffer from a bad case of procrastination in filing and paying my income taxes. I have not filed for over two years out of pure laziness. Recently, I heard a radio ad for a tax resolution company that talked about the IRS ramping up its efforts to collect from people in this Covid-19 era.
“The ad stated, ‘The IRS will use every trick in the book to drain your bank account while there is still money in it.” I called the ‘800′ number and spoke with one of their ‘specialists’ who told me they have the ability, in many cases, to make much of the past-due tax and penalties disappear.
“They want a $5,000 retainer and have assured me that I will save thousands of dollars with an Offer in Compromise of what I might owe they can negotiate in less than 60 days. You have written about this in the past and were very skeptical of such promises. Has anything changed? Are they just blowing smoke at me or is this even possible. Thanks, “Justin.”
“Pure Nonsense,” responds a former IRS tax attorney
I ran my reader’s question by a friend of this column, former IRS trial attorney, Howard Levy. Based in Cincinnati, Ohio, he has over 25 years of experience representing individuals and companies facing tax controversies.
“These kinds of advertisements from ‘tax resolution companies’ are usually only half-right and can frighten delinquent tax payers into hiring them with horror stories. But in reality the IRS has stopped collection enforcement effective April 1, 2020 in a March 25 stated in press release captioned Existing Installment Agreements:
“For taxpayers under an Existing Installment Agreement, payments due between April 1 and July 15, 2020 are suspended. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Debit Installment Agreement, may suspend payments during this period if they prefer. Furthermore, the IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances.”
Levy also points out that IRS Field Collection Activities have also been suspended, citing the press release:
“Liens and levies, including any seizures of a personal residence, initiated by field revenue officers will be suspended during this period. However, field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted.”
In addition, Levy observes that, “The IRS will not be forwarding new delinquent accounts to private collection agencies to work during this period.”
IRS Service Centers are Shut Down
What has been happening to the rest of us also has impacted the IRS.
“Most IRS Service Centers are shut down and those who would normally be working in Federal Buildings are working from home, including IRS attorneys and collection agents. Collection agents who work at IRS Service Centers have not been working at all. I suspect there will be a back-end to all of this, due in part to mail not being processed and piling up,” Levy says.
“There are a lot of people who are simply unable to pay their taxes for this year, especially self-employed taxpayers. They are accumulating a huge amount of unpaid tax and that will all mature when they file next year. We will see a significant increase in people who will be struggling to pay their taxes. This will lead to an increase in IRS inventory of unpaid tax debt as a result of the shut-down.”
The IRS Agents are Showing Sensitivity to what is Going On
Levy notes that “The marketing of these tax resolution companies as scaring people about the IRS seizing everything they own has not been met with any increased in actual seizures, especially now until July 15th. Taxpayers have no risk of seizure now. So when you hear, ‘Beware, the IRS is going to take your stuff,’ they aren’t taking a thing between now and July 15.
“Just like with any very large company, you find IRS people who are sensitive to what is occurring around them and who care. And that’s what I am finding with many IRS agents. They understand that the economy is terrible shape, and so, they are closing files out more readily, revealing compassion for a taxpayer’s circumstances.”
Nothing Has Changed to Justify False Advertising
I’ve listened many of these ads on satellite radio, news talk stations, and on the internet, almost all making it appear that it is far easier to settle with the IRS now than ever before.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.